TSC HARDWARE SDN BHD (dahulunya dikenali sebagai THOMTAPE CORPORATION SDN BHD) v 1. ) TOP WIN HARDWARE TRADING SDN BHD 2. ) TOP WIN RESOURCES SDN BHD

Case Significance

Illustrates the position of a vendor as a bare trustee once the purchase price has been fully paid, retaining no beneficial or proprietary interest and bound to facilitate a transfer to a sub-purchaser, and the limits on withholding a transfer of property on account of outstanding maintenance charges.

This High Court decision at Shah Alam concerns a vendor's obligations as a bare trustee of property on a completed sale and the right of a sub-purchaser to have the property transferred. The plaintiff, a company that had bought two factory units, brought an originating summons for a declaration that the first defendant held the properties as a bare trustee for the plaintiff in connection with a sub-sale, and to prevent the first defendant from obstructing the transfer of the properties to the sub-sale purchaser on the ground of maintenance charges said to be owing to the second defendant. The court held in the plaintiff's favour. It found that once the purchase price had been fully paid, the first defendant, as a bare trustee, no longer retained any beneficial or proprietary interest in the properties and could not refuse to facilitate their sale and transfer to a subsequent purchaser. Any refusal by the first defendant to assist the sub-sale and to execute the necessary documents constituted a breach of that trust. The court rejected the arguments raised against the plaintiff, including reliance on warranties in the sub-sale sale and purchase agreement that did not relate to the first defendant, and defences of laches, acquiescence and delay. It examined the powers of the second defendant to collect maintenance charges under the Strata Management Act 2013 and related legislation, and concluded that the maintenance charges could not be used to hold up the transfer. The court allowed the originating summons, dismissed the defendants' counterclaim, and awarded costs of RM20,000 to the plaintiff. The court's approach shows that a bare trustee holds the legal title only as a conduit for the beneficial owner, and cannot use that bare legal title, or a third party's separate claim, to frustrate a sale the beneficial owner is entitled to complete. The judgment is a useful illustration of the position of a bare trustee once the purchase price is paid and of the limits on withholding a transfer of property on account of outstanding maintenance charges.